Sweeping new rules and technological advances have given regulators unprecedented insights into the markets they’re charged with overseeing. A constant stream of high-quality information from exchanges around the world is arming regulators with the analytics necessary to rigorously enforce this year’s MiFID II rules.

Gaining access to the same breadth of market intelligence can prove difficult for investment and trading firms. Market data vendors do a fantastic job of gathering and distributing data, but they typically specialise within particular sectors or markets, and are geared to meet the needs of specific paying clients. Consequently, data has become siloed and fragmented at many firms.

The FCA & algorithmic trading

It’s a troublesome situation, especially for firms engaged in algorithmic trading activity. This sector of the market has long been under scrutiny, increasingly so since the UK’s Financial Conduct Authority (FCA) published guidelines on algorithmic trading compliance in wholesale markets (http://bit.ly/2FeChZq) earlier in February 2018.

The FCA stressed the need for suitable and robust pre-trade and post-trade risk controls within the sector. This is where the question of data becomes key: Without deep, high-quality comprehensive market data, firms may be unable to gain the insights needed to monitor and respond to potentially illegal flaws in their algorithmic trading strategies. If they cannot do that, they leave themselves vulnerable to accusations of market abuse.

It’s therefore imperative that they have access to analysis drawn from a deep lake of intelligence, one that can offer insights from across markets and asset classes. Ideally, a single source of data from which they can derive the same holistic market perspectives as their regulators.

This is where AQMetrics can help.

Golden big data source

We have spent the past years constructing a comprehensive data repository that is fed by market data providers from across multiple markets and jurisdictions. Through these partnerships we have begun coalescing pools of intelligence from disparate systems into one vast market data lake. From this golden source of data we can mine the raw materials to fuel more sophisticated and advanced risk analytics and offer deeper market insights.

Our Apache Spark architecture has been built to manage the largest exchange, trade and market data sets at great velocity. When combined with our award-winning risk, regulatory reporting and transaction processing technology, it offers exactly the infrastructure firms need in order to comply with regulatory best practice, giving them access to the sort of high-end insights and analytics that can help identify potential anomalies within their trading strategies. And through our real-time and audit-trailed alerts, they have the capability to maintain full control and reduce the risk of any such anomalies recurring.

No more grace period

The FCA’s publication has been interpreted in the market as a warning that firms engaged in high-frequency and algorithmic trading activity will be under the FCA spotlight throughout 2018 and beyond. From now on firms can expect the regulator to step up its monitoring and enforcement activities.

To ensure ongoing compliance with a regulator empowered by access to the most sophisticated market insights, it’s critical that companies have the mechanisms in place to utilize the deepest sources of high-quality data for regulatory and firm wide risk analytics.